Facebook stock falls again as company ponders smartphone business

View full sizeThe Associated PressA television photographer shoots the Like sign outside of Facebook headquarters in Menlo Park, Calif. The company went public recently. Now news reports suggest founder Mark Zuckerberg wants the company to get into the mobile hardware business.

Facebook's stock is below $30 a share -- $28.25, to be exact, which is well off its $38 IPO price.

Pundits and observers have been weighing in non-stop the past few weeks since Facebook stock went public. But the IPO is not the only news surrounding the company. It's once again contemplating going into the mobile phone hardware business, according to Nick Bilton of The New York Times.

"How did a company best known for wasting people’s time (when it’s not
violating their privacy) become the IPO stinker of our times? Because
people forget that it’s been proven time and again that the only proven
winners in IPOs are the issuers, insiders and underwriters, with favored
clients like hedge funds and institutional investors the only ones able
to benefit consistently from IPOs that perform well out of the starting
gate."

Henry Blodget at Business Insider has a few thoughts on the prospect of Facebook going into the mobile hardware business. It's a bad idea, Blodget writes, because it smells of desparation:

"The move would clearly be defensive, not offensive. According to a Facebook employee quoted by Bilton, "Mark [Zuckerberg] is worried that if he doesn’t create a mobile phone
in the near future that Facebook will simply become an app on other
mobile platforms." Translation: Facebook is doing this because it thinks
it has to, not because it wants to."

"After raising $16 billion in an IPO, Facebook obviously has the money to
make some risky bets on building a brand-new business (or businesses).
It clearly needs to do something to produce the kind of blockbuster
growth that would justify what is still a phenomenally expensive stock price,
and the company has said its future rests in large part on the mobile
market. All of those factors have created a perfect storm of market
conditions and desires, and the result could be a very big and
potentially disruptive bet by Zuckerberg."

"It's possible that a Facebook phone will be a big success, but the
dirty little secret of the smartphone industry is that it's mostly
littered with failure. If you were talking about an industry in which a
dozen firms are making fat profits, then obviously Facebook's going to
want to get in the game. But of all the firms out there making
smartphones, only Apple and Samsung are making any money."

Finally, Eliot Spitzer, also on Slate, returns us to the verisimilitude of the whole IPO process, which he says worked well for Facebook. Of the IPO, Sptizer writes:

"...what it reflects is that the company raised as much money as it
could, instead of leaving money on the table for those lucky enough to
have been given selective access to the initial offering."